Former hedge-fund manager Bruce Krasting says the Dodd-Frank bill will help Wall Street turn credit unions into toast.
“Just the heading (of Congress’s recently passed act that stops the National Credit Union Association to make expenditures without borrowing from the Treasury) scares guys like me,” Krasting writes in a note to investors.
“The purpose of the law … is to avoid Treasury from forking out money to the NCUA,” says Krasting. “That would be a bailout. Everyone hates bailouts.”
“But there is a large hole in the NCUA system that should be filled. If that bucket is not filled by Treasury then who will fill it?”
Krasting believes the plan is to assess the individual credit unions for several years worth of insurance premiums, just as the FDIC assessed banks last summer.
While such prepayment carries no economic penalty for the banks, individual credit unions unable to pay the premiums would become prey to Wall Street investment banks.
“There is big money to be made in this consolidation,” says Krasting. “Big players will no doubt be involved. At the end of the day the big banks will make another bundle.”
“The cost, over time, from less competition and higher fees to consumers will be more than the $30 billion (in Treasury fund help) that is being avoided.”
The Yuma, Arizona Sun reports that the National Credit Union Administration assumed control of operations at AEA Federal Credit Union last week, but said that service to the credit union's 49,130 members will continue uninterrupted.
© 2017 Newsmax Finance. All rights reserved.